Chapter 11 Vs Chapter 13 Bankruptcy: An Overview
There are some notable differences between Chapter 11 and Chapter 13 bankruptcy, including eligibility, cost, and the amount of time required to complete the process. Both bankruptcies give debtors the opportunity to stay in business and restructure their finances.
Barring some limitations, both bankruptcies allow filers to modify their payment terms on secured debts, provide time to sell assets, and eliminate obligations the filer cannot pay over the plans term. While both allow the discharging of debts, more debts can be discharged under Chapter 13.
Should I File Chapter 7 Or Chapter 13 Bankruptcy
To be clear, the question is not just which type of bankruptcy is appropriate to your situation. Its whether bankruptcy is the right move for you period.
Its a complicated process, and you should consider speaking to a to determine if theres another way to deal with your debt. Nonprofit consumer credit counseling organizations receive more favorable terms with creditors, and its possible that a debt management plan, debt consolidation loan or debt settlement could be a better solution. You can review your options for free by speaking to a credit counselor.
If bankruptcy is your best course of action, InCharge offers bankruptcy court-approved bankruptcy education courses through PersonalFinanceEducation.com.
You Have Filed Your Income Tax Returns
To meet Chapter 13 requirements, you must provide proof of filing state and federal income tax returns for the previous four years. At least seven days before the first meeting of creditors, you must provide the trustee with a copy or a transcript of the most recent federal tax return filed with the IRS.
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Understanding Chapter 13 Bankruptcy In Georgia
A Chapter 7 filing allows debtors to discharge debts. However, a Chapter 13 filing involves creating a debt repayment plan. Therefor, Chapter 13 is best for those who have a source of income but are overwhelmed by debt.
Your bankruptcy attorney will help you arrange and propose a payment plan to the bankruptcy courts. This plan will help you pay off some or all of your debt in a much more manageable way. Filers will continue to pay monthly on this plan for the 3-5 year duration of the Chapter 13 bankruptcy.
Filing for Chapter 13 bankruptcy immediately starts the automatic stay. This protects you from collection actions such as wage garnishments, foreclosures, and repossessions. The automatic stay can give you the time you need to save your essential assets and recover financially.
How much you pay will depend on the disposable income you have, your assets, and whether you have any previous bankruptcy filings. Our attorneys are dedicated to obtaining the lowest payment possible for your situation.
What It Means To Represent Yourself
When you represent yourself, you are responsible for researching the law, following the bankruptcy court rules, preparing and filing all of your documents, and making all of the decisions in your case.
When you file for Chapter 13, a trustee is appointed but the trustee is not your lawyer. In fact, the trustee is prohibited from providing you with legal advice and is rarely, if ever, able to respond to calls or emails requesting help with your case. The Chapter 13 bankruptcy trustee will likely notify you if your plan is not in compliance with bankruptcy rules, law, or local procedure, but it will be up to you to correct the problem. Similarly, court employees can answer simple procedural questions but are also not allowed to provide legal advice.
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Increases In Income During Bankruptcy
When you are not able to handle your financial situation yourself, the court allows you to use Chapter 7 or Chapter 13 bankruptcy to restructure or get rid of some liabilities. By following through with this procedure, you can get out from under overwhelming debt and have a fresh start. While bankruptcy offers a great deal of hope for the future, it can be a complex and stressful process to get through. During bankruptcy, the court must have a full accounting of what you make and owe in order to approve this process and guide you through the necessary repayments. It comes as no surprise then that your actual income during a bankruptcy proceeding is important. If you experience increases in income during bankruptcy, this may alter your rights under the law or your required debt payments.
To handle this situation properly and ensure it does not hurt your future financial freedom, contact a Cleveland bankruptcy lawyer at Luftman, Heck & Associates right away at .
You Can Repay A Certain Amount To Unsecured Creditors
Nonpriority, unsecured creditors may also be entitled to repayment. Because a debtor may keep nonexempt property under Chapter 13 bankruptcy, a debtor must repay nonpriority, unsecured creditors at least the amount equal in value to their nonexempt property over the life of the repayment plan. Nonexempt property typically includes household appliances and furniture, inexpensive jewelry, and a certain amount of equity in a home or motor vehicle.
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Who Is Eligible For Chapter 13 Bankruptcy
Anyone with regular income can file for Chapter 13 bankruptcy, as long as the total debt is within the threshold. The individuals income level helps determine the timeline of the repayment plan.
If your income exceeds the median level in your state, youll repay your debts over five years. If your income is below the median, repayment will take place over three years.
Here are some things to consider if you are thinking about filing for Chapter 13.
- Regular income is required.
- You must provide up-to-date tax returns and payments.
- Unsecured debts, like those from unsecured credit cards and personal loans, cant exceed $394,725. Secured debt for example, from a mortgage or car loan cant exceed $1,184,200.
- You may not qualify if youve had a bankruptcy dismissed within 180 days for a failure to appear in or comply with the bankruptcy court.
- To receive a discharge at the end of a Chapter 13 repayment plan, you cant have received a discharge from a Chapter 13 bankruptcy within the previous two years or from a Chapter 7, Chapter 11 and Chapter 12 within the previous four years.
Pitfalls When Representing Yourself In Chapter 13 Bankruptcy
When you file Chapter 13 without a lawyer, there are many pitfalls that could lead to dismissal of your case. Common reasons for the dismissal of Chapter 13 cases where the debtor is self-represented include failing to:
- file all of the schedules, statements, and local forms completely and on time
- file a plan within the time allowed or to file a confirmable plan
- provide proper notice to creditors
- include spousal or household income in the means test, where applicable, or including expenses which are not allowable
- comply with local procedures
- timely begin making plan payments
- correct filing errors within the time allowed
- appear at creditors meetings and hearings
- maintain insurance on vehicles and real property, and
- file tax returns timely and provide copies to the trustee or file with the court, as may be necessary in your district.
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Do I Qualify For Chapter 13
Individuals or married couples who have a source of income and are overwhelmed by their debt can file for Chapter 13.
In order to qualify for Chapter 13, you must have:
- Current income tax filings
- Sufficient disposable income
- Very high debts
If you file bankruptcy in Augusta, your income will be compared to the median income for a household of your size in whatever county you reside in. So, your income will affect your bankruptcy case differently depending on what county you live in. Ultimately, your average monthly income will be annualized, then compared, to the median income to similarly sized families in your county.
If your secured and unsecured debt exceeds a certain amount, you may need to file for another type of bankruptcy. Additionally, your debt must not be because of a business that you own.
Differences: Chapter 7 And Chapter 13
Overwhelming debt? Time for a fresh start? There are two options for filing personal bankruptcy in Virginia: Chapter 7 or Chapter 13. During your free consultation our attorneys can help you decide which option is best for your situation.
Under the Federal Bankruptcy Code people overwhelmed with debt may apply for bankruptcy protection under Chapter 7 or Chapter 13. Each offers legal protection depending on your individual circumstances. Boleman Law offers everyone a free consultation with a skilled, experienced bankruptcy attorney to review and recommend options. Just call for an appointment.
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Should I File For Chapter 13 After Filing For Chapter 7
If you file Chapter 13 at least four years after filing Chapter 7, you can have a very low monthly Chapter 13 payment plan and receive a full discharge of all remaining balances after you complete the three- to five-year plan. For example, you could pay as little as $100 a month for three years inside of Chapter 13, paying very little to your creditors and yet still discharging the remaining balances owed.
This may be a good option for people who have student loan debt, certain types of income tax debt and child support payments to make, says Sean Fox, president of Freedom Debt Relief. These things cannot get discharged in a Chapter 7 bankruptcy.
Things To Do After Filing For Chapter 13 Bankruptcy On Your Own
After filing, you can no longer change your mind to withdraw. Because, the automatic stay begins. There are some other things you should do after filing DIY chapter 13 bankruptcy. Such as:
1. Dont miss the last credit counseling session. This will take an hour or so where you will need to watch a video and answer a few questions. Then, pay the fee and print the certificate number. Send your certificate number to the right place. You will get a letter telling you where you need to send this information. After you get the final documents in your mail, start making monthly payments to the Trustee.
2. You need to make your first payment to the bankruptcy trustee within 30 days of filing as per the proposed debt-repayment plan. The proposed monthly payment will be based on your disposable income.
3. You should give a response to the trustee as long as receive any correspondence from the trustee or the court.
4. You should attend the meeting of creditors on the stipulated date and time. Dont ignore the meeting as you will be asked some basic questions by the trustee and creditor.
5. You should attend the confirmation hearing. The confirmation hearing will be held just after the creditors meeting is done.
6. Once you get the court approved repayment plan, then youll be able to get the 3-5 years of repayment period.
7. Don’t forget to pay the monthly payments to the bankruptcy trustee on time.
8. Lastly, you
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Understanding The Risks And Responsibilities Of Diy Bankruptcy
The DIY bankruptcy filing process is referred to as filing pro se . While you have the right to file bankruptcy on your own, bankruptcy courts tend to strongly advise against this course of action.
The process of filing for bankruptcy can be very complicated:
- Every bankruptcy requires a minimum of at least 14 different forms.
- Bankruptcy has a series of deadlines which must be met on time.
- If you fail to file or properly complete even one of these forms, it may result in dismissal of your case and you will not receive a discharge of your debts.
When you file for bankruptcy, in Wisconsin there are countless hoops to jump through:
- You will have to appear at a meeting of creditors to answer a series of questions under oath.
- You will also need to provide the trustee assigned to your case a list of documents regarding your financial affairs.
- If you fail to provide any of the paperwork or fail to answer any of the questions correctly, you increase the risk that your bankruptcy discharge will be denied or delayed.
You Have Fulfilled The Credit Counseling Requirement
A Chapter 13 debtor must file with the bankruptcy court a certificate of proof showing an approved credit counseling agency provided debt counseling at least 180 days prior to the Chapter 13 filing.
If the credit counseling agency created a debt management plan, the debtor must provide a copy to the court. The debtor must also file the certificate with the initial paperwork or must provide it within 15 days after filing for bankruptcy.
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Do You Qualify For Chapter 13 Bankruptcy
To qualify for Chapter 13 bankruptcy:
You must have regular income.
Your unsecured debt cannot exceed $419,275, and your secured debt cannot exceed $1,257,850.
You must be current on tax filings.
You cannot have filed a bankruptcy petition in the previous 180 days that was dismissed for certain reasons, such as failing to appear in court or comply with court orders.
Even if you qualify for Chapter 13 bankruptcy, make sure you know the difference between Chapter 7 vs Chapter 13 bankruptcy.
If you dont qualify for Chapter 13, consider looking into other debt relief options.
Who Should File Chapter 13 Bankruptcy
Many people think of bankruptcy court as the final stop on a path to financial ruin, the only option left when repaying debts seems impossible. But theres hope even in bankruptcy, and Chapter 13 of the federal bankruptcy code offers the closest thing to a soft landing.
Sometimes called the Wage Earners Bankruptcy, Chapter 13 allows those with enough income to repay all or part of their debts as an alternative to liquidation. Its bankruptcy for those whose biggest problem is dealing with creditors demands for immediate payment, not lack of income.
One of its most attractive features is the chance to keep your home after Chapter 13 bankruptcy as long as you can pay the mortgage and any amount required by your Chapter 13 repayment plan.
Under Chapter 13, people have three to five years to resolve their debts while applying all their disposable income to debt reduction. The option allows applicants to eliminate unsecured debts while catching up on missed mortgage payments. Short-circuiting home foreclosure is one of the options most attractive features. Though keeping your home can be a major relief, youre required to spend years living under the supervision of a court-appointed trustee who will collect and distribute your payments.
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Keep All The Documents
Keep the receipt of your case number, the name of the judge, trustee, a court date for the meeting of creditors. Read out all the information carefully that you get from the Trustee. Follow the information and do whatever is asked by the Trustee. Attend all court appearances to know about your repayment plan and for how many years you will have a repayment plan.
The Night Before: Look For Help
If your financial situation is simple, you may not need any assistance with the filing process. However, if you run into any snags, its imperative to know where to go for help. Visit LawHelp.org or search the Internet for legal aid organizations in your area, most of which offer legal advice both by phone and in person. Although seeking assistance may put a dent in your one-day plan, filing an accurate petition is much more important than speed.
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Types Of Bankruptcy Software
There are two types of bankruptcy software.
- Form-based: These offer basic forms, usually in PDF format, and perhaps some explanation or guidance beyond what youll find in the official forms themselves.
- Interactive: Instead of filling out forms, youll answer questions online, and the software will take your answers and insert the data into the appropriate form.
When You’ll Need A Bankruptcy Attorney
It’s usually best for any bankruptcy filer to hire an attorney. That said, as discussed above, individuals can represent themselves in the right circumstances. It just depends on the case and the comfort level of the person.
You’re Filing for Chapter 13
Chapter 13 bankruptcy is a powerful financial tool that can allow you to:
- catch up on your missed mortgage or car loan payments
- eliminate unsecured junior liens from your home through lien stripping, or
- reduce the principal balance or interest rate on your car loan with a cramdown.
But Chapter 13 bankruptcy is considerably more complicated and labor-intensive than Chapter 7. If you want the court to confirm your Chapter 13 bankruptcy, you must propose a feasible repayment plan, which is challenging to do without legal knowledge and the software used by bankruptcy lawyers.
Further, if you wish to pay less on your house or car by stripping a second mortgage or cramming down a car loan, you’ll need to file a motion or adversary proceeding with the court, which also isn’t an easy task.
Learn more in Releasing Liens in Bankruptcy: Lien Avoidance.
You’re Filing a Complicated Chapter 7
Of course, if you don’t believe you can navigate the bankruptcy process, or if you aren’t comfortable with it, it’s probably best to hire a bankruptcy lawyer.
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Chapter 13 Bankruptcy Is A Legal Process That Allows People To Repay Their Debts Over Time While Having The Opportunity To Keep Valuable Assets Like A Home
Chapter 13 bankruptcy is also called the wage earners plan, because those who file need regular income to qualify. Instead of having your debt forgiven, youll restructure your debt with a three- to five-year repayment plan.
The flexibility of the repayment plan can make Chapter 13 the right kind of bankruptcy for those who have a job with steady income and want to hold onto their property.
Heres a rundown of whos eligible for Chapter 13, the general shape of the process, and the pros and cons to consider before filing.